Gates Foundation Pledges $500 Million to Help the Poor Save Money
Wednesday, November 17, 2010
The Bill & Melinda Gates Foundation pledged $500 million Tuesday to help create new banking systems that will reach into the world’s most impoverished corners and allow families earning $2 a day or less to begin saving money.
After years of promoting microcredit borrowing to help impoverished farmers and bottom-of-the-rung entrepreneurs expand their business opportunities, foundation leaders said it was increasingly apparent that saving, not just credit, is crucial to helping poor families weather crises, pay for schooling and make small investments to expand their incomes.
“Loans for the poor in some ways may be more intuitive for people to understand, and I think people naturally understand that poor people often don’t have access to capital or to credit or to cash. But I think people don’t often as easily grasp the concept that the poor actually need to save,” Melinda French Gates, co-chair of the foundation, said at a forum here on the swiftly expanding global financial sector aimed at serving millions of poor.
Mobile banking for the poor – via cellphone in Kenya and Bangladesh and smart card in Mexico – is becoming so successful that villagers who live far from the nearest bank and whose earnings fall well below traditional minimum deposit thresholds are becoming twice-a-week depositors.